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PETITIONER: MUNICIPAL CORPORATION OF GREATER BOMBAY

       Vs.

RESPONDENT: NEW STANDARD ENGINEERING CO. LTD.

DATE OF JUDGMENT07/12/1990

BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) AHMADI, A.M. (J) SAHAI, R.M. (J)

CITATION:  1991 AIR 1362            1990 SCR  Supl. (3) 478  1991 SCC  (1) 611        JT 1991 (1)   174  1990 SCALE  (2)1236

ACT: Bombay Municipal Corporation Act, 1888: Property Tax.     Section--154   Property tax--Rateable value of  Respond- ent’s  building--How to be determined--Whether it is  to  be determined  under  sub-section  (1) or  sub-section  (3)  of Section 154.     Section  154--Explanation  to  Section   154(3)--"Recog- nised scheme of subsidised housing for industrial workers or persons   belonging  to  lower  income  groups   or   poorer classes"--Consultation  with  corporation--Effect  of   non- observance  of statutory prescription of consultation   Held prior consultation mandatory.

HEADNOTE:     The Respondent Company an industrial concern constructed a  building to provide housing accomodation for its  workers under the Government Subsidised Scheme for Industrial  Work- ers  after  obtaining a certain amount of subsidy  and  loan from  the  Government under an agreement  dated  12.11.1959. Clause 5 of the agreement required the Respondent Company to adhere  to all the terms, conditions and stipulations as  in force at the date of ’Government of India Subsidised Housing Scheme  for  Industrial Workers’ Clause 8 of  the  agreement imposed limitation on the company not to charge rent exceed- ing  Rs.26.50 per month per tenement inclusive of  municipal rates and taxes.     For  the purpose of charging property tax on the  Compa- ny’s  said  building,  the Municipal  Corporation  made  the assessment  under subsection (1) of Section 154 of the  Act. In making the assessment the annual letting value was  fixed at  an amount higher than the actual rent charged  for  each tenement. The Company objected to the assessment raising the plan that the building has been constructed under the recog- nised  Government subsidised housing scheme  for  industrial workers  and it is restrained from charging  rent  exceeding Rs.26.50  per month from each allottee. Therefore the  Rate- able  Value  should be fixed under sub-section (3)  and  not under  sub-section (1) of Section 154. The  Corporation  re- jected the contentions of the Company. Appeal preferred by 479

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the  Respondent-Company  to the Small Causes Court  was  un- succesful.  On  further  appeal the High  Court  upheld  the Respondent’s claim and directed the Municipal Corporation to revise  the  Rateable  Value taking into  account  only  the actual  rentals  recoverable  by the  Respondent  from  each tenant  which  would be the Standard Rent for  each  of  the blocks. On the crucial point of prior consultation, the High Court held that the same is more or less directive in nature and not to be regarded as mandatory and therefore the  omis- sion  on the part of the Government to consult the  Corpora- tion  cannot  take the case out of the Explanation  to  sub- section  (3) of Section 154 of the Act and  the  Corporation would not be at liberty to take the Rateable Value more than the actual rentals charged. The Corporation has appealed  to this  court challenging the correctness of the  decision  of the  High  Court.  Allowing the appeal,  setting  aside  the judgment  of the High Court and restoring that of the  Small Causes Court, this Court,     HELD:  Procedural safeguards which are so often  imposed for  the  benefit  of persons affected by  the  exercise  of administrative  powers, are normally regarded as  mandatory, so  that  it is fatal to disregard them. Where  there  is  a statutory duty to consult persons affected, this must  genu- inely be done and reasonable opportunity for comment must be given.  If  the exercise of power is likely  to  impair  the proprietary  or  financial interests of named bodies  to  be consulted, then generally the provision requiring  consulta- tion before the statutory power is exercised is construed as mandatory. [485G-H, 484H-485A]     There must be opportunity for the Corporation to express its  views on the recognised scheme and the  terms  thereof. The  opinion expressed by it may not be binding on the  Gov- ernment  which  may take its own decision  but  nevertheless consultation  with  the  Corporation must be  there  on  the essential  points and the core of the subject  involved.  If there  is  no such consultation the  Corporation  cannot  be compelled  to fix the rateable value of the  building  under sub-section (3). The High Court seems to have erred in  this regard.  The right to be consulted in opposition to a  claim or proposal which will adversely affect its financial inter- ests is to be regarded as mandatory. [486F-G, E]     Banwarilal Agarwalla v. State of Bihar & Ors., [1962]  1 SCR 33; Kali Pada Chowdhury v. Union of India, [1963] 2  SCR 904; Naraynan Sankaran Mooss v. The State of Kerala &  Anr., [1974]  1  SCC  68; Naraindas Indurkhya v.  State  of  M.P., [1974] 4 SCC 788 and Agricultural, Horticultural and forest- ry Industry Training Board v. Ayles- 480 bury Mushrooms Ltd., [1972] 1 WLR 190, followed. BOOKS CITED     Administrative  Law by H.R.R. Wade, 6th Ed. p.  247;  De Smith’s  Judicial Review of Administrative Action, 4th  Edi- tion, pp. 144-45.

JUDGMENT: